Question

Power Drive Corporation designs and produces a line of golf equipment and golf apparel. Power Drive has 100,000 shares of common stock outstanding as of the beginning of 2018. Power Drive has the following transactions affecting stockholders' equity in 2018. March 1 Issues 62,000 additional shares of $1 par value common stock for $59 per share. May 10 Repurchases 5,700 shares of treasury stock for $62 per share. June 1 Declares a cash dividend of $1.85 per share to all stockholders of record on June 15. (Hint: Dividends are not paid on treasury stock.) July 1 Pays the cash dividend declared on June 1. October 21 Reissues 2,850 shares of treasury stock purchased on May 10 for $67 per share. Power Drive Corporation has the following beginning balances in its stockholders' equity accounts on January 1, 2018: Common Stock, $100,000; Additional Paid-in Capital, $5,200,000; and Retained Earnings, $2,700,000. Net income for the year ended December 31, 2018, is $670,000. Required: Prepare the statement of stockholders' equity for Power Drive Corporation for the year ended December 31, 2018. (Amounts to be deducted should be indicated by a minus sign.) POWER DRIVE CORPORATION Statement of Stockholders' Equity For the Year Ended December 31, 2018 Common Stock Treasury Stock Additional Paid-in Capital $ 5,200,000 Retained Earnings $ 2,700,000 Total Stockholders' Equity $ 8,000,000 $ $ 0 100,000 62,000 Balance, January 1 Issued common stock Purchase treasury stock Dividends Sale of treasury stock Net income Balance, December 31 $ 162,000 5,200,000 2,700,000 0 $ 8,062,000

Answer 1

Statement of stockholder's equity

For the year ended December 31, 2018

	Common Stock	Additional paid in capital	Retained earnings	Treasury stock	Total Stockholder's equity
Balance January 1	100000	5200000	2700000		8000000
Issued common Stock	62000*1 = 62000	62000*58 = 3596000			3658000
Purchase treasury stock				5700*62 = -353400	-353400
Dividends			-289155		-289155
sale of treasury stock		2850*5 = 14250		2850*62 = 176700	190950
Net income			670000		670000
Balance December 31	162000	8810250	3080845	-176700	11876395